SINGAPORE: Dalian iron ore futures extended gains on Tuesday, as Chinese steel mills procured feedstock ahead of the May Day holiday and fuel shortages in major exporters Australia and Brazil raised concerns about supply disruptions.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) rose 0.64 percent to 784 yuan (USD115.05) a metric ton.
The benchmark May iron ore on the Singapore Exchange was flat at USD106.95 a ton, as of 0726 GMT.
Steel mills in China are restocking ahead of the May 1-5 holiday, providing support to prices, Australian bank ANZ said in a note.
The lender also said there were concerns around iron ore supply due to fuel shortages impacting mining in Australia and Brazil.
Volumes of iron ore arriving at Chinese ports declined last week by 20 percent week-on-week, driven by lower exports of Brazilian ore, as monsoon rains affected mining operations, Shanghai Metals Market said in a note.
The Middle East conflict has also resulted in a reduction of Iran’s steel exports, potentially leading to more appetite for Chinese steel, Chinese broker Everbright Futures said.
In company news, Rio Tinto reported a 2.4 percent rise in first-quarter iron ore sales, driven by robust production at its Pilbara operations.
The world’s biggest iron ore producer sold 72.4 million metric tons (Mt) of iron ore from its Pilbara operations in the three months ended March 31, compared with shipments of 70.7 Mt a year earlier.
Other steelmaking ingredients on the DCE gained ground, with coking coal and coke up 1.53 percent and 2.42 percent, respectively.
Steel benchmarks on the Shanghai Futures Exchange were mixed. Rebar gained 0.76 percent and hot-rolled coil rose 0.72 percent, while wire rod eased 0.09 percent and stainless steel shed 1 percent.
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